Keeping the main thing, the main thing
Rising costs debuts at No. 5 on EY Global Mining's risk radar; isn't how risks affect costs the main thing?
Last updated 1/25/2019 at 5:06am
I, for one, feel vindicated, relieved and ready to face the New Year! How so, you ask? Please let me explain.
For those of you who remember my column in November, I noted that EY Global Mining and Metals publishes an annual "risk radar" for mining and metals, outlining what mining companies perceive as the top ten risks facing them in the near future. This publication was for the years 2017-2018 and stated that "Our number one risk this year is digital effectiveness." If you recall the above, you will also recall my asking what in tarnation is "digital effectiveness"? And that brings me to vindication, relief and readiness to push on into 2019.
EY Global Mining and Metals' most recent edition of the risk radar, for 2019-2020, is out and digital effectiveness has fallen to the No. 2 position behind this coming year's biggest perceived risk, "Social license to operate", itself, rocketing up to first place from seventh in the previous survey. I have no issues with social license to operate being number one for 2019-2020, after all, without it, all the other concerns are moot.
Rounding out the top 5 are maximizing portfolio returns at No. 3, cyber concerns at No. 4 and rising costs at No.5. Risks 3 and 4 swapped places from last year's survey but concerns of rising costs is considered "new" to the top ten risks.
Forgive me for being the capitalist that I am, but isn't every risk concern directly linked to its potential to increase or decrease costs? Depending on how an entity handles the risks it faces, its bottom line will be affected.
Earning and maintaining its social license to operate improves an entity's ability to stay in business. Becoming more digitally efficient, improving stakeholder returns, minimizing cyber disruptions, et cetera, all impact an entity's ability to control costs and, in the end, either stay in business or become a footnote in mining history.
EY Global Mining and Metals is wisely and politely telling us to manage the risks we face and keep our eye on the prize. As educator, author, and speaker Steven Covey liked to say: "The main thing is to keep the main thing the main thing."
Partners Novagold Resources and Barrick Gold have signed a wetlands mitigation agreement affecting their Donlin gold deposit. The project is on land owned by mineral estate owner Calista Corp. and surface estate owner The Kuskokwim Corporation. The Donlin project is expecting to impact approximately 2,800 acres of wetlands. Such impacts must either be reclaimed or replaced, so the agreement was signed with the Alaska Mental Health Trust Authority to protect some of the Trust's wetlands in the Cook Inlet area. Under terms of the agreement, the Donlin project operators would purchase the conservation easement on a portion of the Chuitna River, covering approximately 2,000 acres, protecting that habitat and restricting its future use from development. Under the agreement, Donlin agreed to pay $200,000 to the Trust, plus additional money each year for 10 years. That buys Donlin an option, giving it time to decide whether or not to construct a mine. If mine development proceeds, Donlin will pay $1.3 million to the Trust to protect those 2,000 acres for 99 years. Donlin also signed an agreement with the Tyonek Native Corp. for a conservation easement on 4,000 acres of land and it plans to sign another agreement with the Great Land Trust to purchase nine credits, the equivalent of nine acres, to protect 4.5 acres of wetlands in the Mat-Su Borough.
Freegold Ventures Ltd. announced results from holes SC 18-01 and SC 18-02 drilled at their Shorty Creek copper-gold project during their 2018 program. A total of 1,166 meters were drilled in two holes within the magnetic high at Hill 1835. Both holes intersected consistent mineralization over broad widths. To date, 12 widely spaced holes with average hole depths of 500 meters have been drilled at the Hill 1835 target, all of which intersected significant and consistent copper, gold, silver and tungsten mineralization over broad widths from the base of oxide material (average 90 meters). Significant results from the 2018 drilling include 442.2 meters grading 0.24 percent copper, 0.09 grams per metric ton gold, 4.74 g/t silver and 0.02 percent tungsten trioxide in hole SC18-01, including 121.15 meters grading 0.45 percent copper, 0.15 g/t gold, 10.5 g/t silver and 0.045 percent tungsten trioxide. Hole SC18-02 intersected 442.4 meters grading 0.22 percent copper, 0.13 g/t gold, 4.03 g/t silver and 0.02 percent tungsten trioxide including 126 meters grading 0.36 percent copper, 0.09 g/t gold, 6.3 g/t silver and 0.018 percent tungsten trioxide. Drilling has expanded the mineralized zone to an area of more than 750 by 300 meters. The target remains open both laterally and to depth
White Rock Minerals Ltd. announced that Australia-based Sandfire Resources NL has exercised its option to enter into a joint venture agreement with White Rock on its 117,000-acre Red Mountain volcanogenic massive sulfide project in the eastern Bonnifield District. Under terms of the agreement, Sandfire must fund a total of AU$20 million over four years to earn 51 percent, with a minimum expenditure by Sandfire of AU$6 million in year one. Sandfire must then fund a further AU$10 million and deliver a pre-feasibility study over an additional two years to earn 70 percent, which may be extended by Sandfire for a further year in certain circumstances. White Rock may elect to contribute to the joint venture. At that point, if White Rock elects not to contribute, Sandfire can sole fund activities to earn 80 percent by completion of a definitive feasibility study. After completion of the feasibility study, White Rock may elect to contribute to the joint venture. If White Rock elects not to contribute, Sandfire will earn 90 percent and White Rock 's 10 percent interest will be earned from project cash flow. White Rock is entitled to continue managing the project for at least the first year of the earn-in and to be paid a management fee equal to 10 percent above all project expenses, with 50 percent of the fee to be paid on signing of the Joint Venture and the balance to be paid in 3 equal installments on a quarterly basis thereafter. Ongoing management responsibility of the project will be subject to annual review and after the first year will be at Sandfire's election. Although Sandfire funded some of the past work on the project, it's conversion to an active explorer earns it "Alaska newcomer" status. So, welcome to Alaska Sandfire Resources NL!
PolarX Ltd. announced plans for 2019 exploration at its Alaska Range project. Following release of the final analytical data from its 2018 exploration programs and prior to the 2019 field season, the company plans to conduct interpretation and 3D modelling of its magnetic data, commence preliminary metallurgical test-work results for Zackly skarn, and finalize plans for its 2019 drilling, geophysical and geochemical sampling programs. Once field operations begin, work will include induced polarization geophysical surveys at Zackly SE porphyry target; 3,000 meters of core drilling to expand Zackly resource, focused on thick, high-grade gold-copper zones at eastern end of the skarn prospect; and an additional 3,000 meters of core drilling to test Mars and Zackly SE porphyry targets. By October the company is hoping to commence a preliminary economic assessment or a preliminary feasibility study.
Hecla Mining Company announced final 2018 production results at its Greens Creek mine. For 2018, the mine produced 7,953,003 ounces of silver and 51,493 oz of gold, representing a 5 percent decrease and 1 percent increase, respectively, over 2017 production figures. For the fourth quarter of 2018, production was 2,163,563 oz of silver and 13,097 oz of gold, representing a 1 percent increase and 13 percent increase, respectively, over 2017 production figures. Lower annual silver production, when compared to 2017, was due to the expected lower grades. The mill operated at an average of 2,316 tons per day in 2018, a record for the mine.
Coeur Mining Inc. announced year-end 2018 production and exploration results from its Kensington Mine. The mine produced 113,778 ounces gold during the year, a slight year-over-year decrease due primarily to lower than expected grades in the first half of the year before higher grade production from the Jualin deposit began to impact mine production figures. Higher grade Jualin feed helped push fourth quarter gold production up to 35,335 oz, a 32 percent quarter-over-quarter increase. Approximately 23,000 tons of development ore and 3,000 tons of stope ore were mined from Jualin during the fourth quarter, yielding production (inclusive of pre-commercial) of nearly 10,500 oz of gold at a grade of 0.40 oz per ton. Jualin reached commercial production status as of Dec. 1, 2018. For 2017 the operation milled 661,731 tons of ore grading 0.19 oz/t gold, with a gold recovery of 93 percent. The company also provided an exploration update for the operation which indicated continued expansion of resources. Infill and expansion drilling continued on Kensington's upper Zone 30 and Upper Raven zones, while a district-wide exploration program was initiated to identify and map new vein targets in the district. As a result, the company completed 27,430 meters of exploration drilling in 2018. Positive exploration drilling results were received at the Elmira and Ophir prospects. Recent drill results at the Elmira vein, located 366 meters east of the Kensington Mine, include 4.4 meters of 34.5 grams of gold per ton and 3.9 meters at 35.9 g/t gold. Drilling has confirmed that the Elmira vein remains open to expansion in all directions. Drilling results from the new Ophir vein, located approximately 1,219 meters west of the Kensington Mine, returned 0.7 meters of 29.5 grams of gold per tonne. Due to their proximity to existing underground infrastructure, the Elmira and Ophir veins represent potential high-grade gold mineralization. At Seward prospect, two of four holes drilled intercepted gold-bearing structures 579 meters below the surface. The Orval Shear, a major regional structural control, was intercepted in the two holes where veins were not encountered, indicating the vein may have been offset by a shear, or structural discontinuity. Exploration plans for 2019 include expansion and infill of Elmira, Raven, Ophir and Seward veins, as well as continuation of the infill programs at Kensington Main and Jualin
Constantine Metal Resources Ltd. and joint venture partner Dowa Metals & Mining Company Ltd. announced its first resource estimate at the AG zone at its Palmer volcanogenic massive sulfide deposit. Using a 5 percent zinc-equivalent cut-off, the new inferred resource at AG came in at 4,256,000 metric tons grading 4.64 percent zinc, 0.12 percent copper, 0.96 percent lead, 119.5 grams of silver per metric ton, 0.53 g/t gold and 34.8 percent barite, equal to 9.04 percent zinc-equivalent grade. The AG resource was built using data from twenty-nine exploration diamond drill holes for 10,766 meters. Drilling data, supplemented by geological surface mapping, were used to generate the geological and structural model for the AG Zone. Twenty of the twenty-nine holes intersected the interpreted mineralized solids. Outlier assays were capped and all assays within the mineralized zones were composited to 1.5-meter lengths. Metal grades were estimated using inverse distance cubed interpolation into a three-dimensional block model with block dimensions of six by six by six meters, which is consistent with the main Palmer deposit. Using the new AG zone resources, combined total indicated resources at Palmer now stand at 4,677,000 metric tons grading 5.23 percent zinc, 1.49 percent copper, nil lead, 30.8 g/t silver, 0.30 g/t gold and 23.9 percent barite, equal to 10.21 percent zinc-equivalent grade; and total inferred resources of 9,594,000 metric tons grading 4.95 percent zinc, 0.59 percent copper, 0.43 percent lead, 69.3 g/t silver, 0.39 g/t gold and 27.7 percent barite, equal to 9.87 percent zinc-equivalent grade.
Grande Portage Resources Ltd. announced additional drilling results from its Herbert gold project near Juneau. Drill holes 18M-1 and 2 were the first ever core holes testing the outcropping North Vein located about 300 meters north of the gold bearing Goat Vein structure. The North Vein occupies an east-west trending fault which dips steeply to the north and is similar in attitude to the Goat, Main Vein, Deep Trench and the Floyd Veins. Two reconnaissance samples taken in 2007 included a grab sample that returned 11.6 grams per metric ton gold and a four-foot chip sample that returned 3.57 g/t gold across a hydrothermally altered shear zone near the east end of the vein. Drilling in 2018 confirmed the existence of the structure at a depth of 100 meters below surface and combined with surface exposures, indicates a strike length of at least 260 meters for the vein. Hole 18M-1 intercepted several strands of the fault in a zone about eight meters true-width. The two best intercepts have about five meters separation with the footwall strand returning a 0.41-meter intercept with 27.8 g/t gold and had visible gold in the core. The hanging wall strand returned a 0.37-meter intercept containing 8.33 g/t gold. Hole 18M-2 intercepted weak alteration in the projected location of the vein with the best intercept showing 0.64 meters grading 0.304 g/t gold. The company also announced the discovery of a new mineralized zone directly underneath its 2018 M Pad location. Seven of the eleven holes drilled from M Pad hit shallow mineralization. The character of the mineralization is a series of fractures with pervasive alteration of the quartz diorite host rock. Alteration consists of chlorite and sericite replacement of original mafic minerals along with iron carbonate and arsenopyrite enrichment with minimal quartz. Arsenopyrite is closely associated with gold in the other veins known at the Herbert prospect. Hole 18M-10 encountered 8.4 meters of 1.65 g/t gold from a depth of 14 meters depth with the strongest being 0.94 meters of 3.94 g/t gold. Hole 18M-13 intersected 4.62 meters of 3.77 g/t gold from 9.1 meters, with the strongest being 1.14 meters of 9.33 g/t gold. The new discovery under Pad M could be a fault offset portion of the vein that extends between the Goat Vein and the North Vein, a distance of about 250 meters. Additional drilling is planned in this area.
Curtis J. Freeman CPG #6901
Avalon Development Corp.
P.O. Box 80268
Fairbanks, AK 99708
Phone: 907-457-5159, Fax 907-455-8069
Email: [email protected]